Hi sir i am 50 years old and i am selling a property for 3 crores and its guidance value is only 70 lakhs this is the amount which i can get registered but i wanted to keep whole money of 3 crores as fixed deposit and need monthly interest so please let me know how can i do this

Ans: To have a regular income by investing a corpus of Rs. 10 crores, diversified investment options need to be considered so that your risk appetite is considered while maintaining the regular inflows. Investment in bonds and FDs will not be sufficient to cater to your needs as diversified investment options enable us to generate inflation-beating returns.

You can explore other options as well such as the Senior Citizen Savings Scheme, and Monthly Income Scheme (MIS) offered by the government. Furthermore, you can also invest in mutual funds and opt for a SWP (Systematic Withdrawal Plan) which provides regular inflows.

Remember, there's no one-size-fits-all solution. Carefully assess your needs and consult a financial advisor before making any investment decisions.

Ans: Let's dive into a detailed plan on how to invest the balance of Rs. 80 lakhs from the sale of your commercial property to generate approximately Rs. 50,000 per month, considering your current investments and financial goals.

Current Investments and Situation
You've sold a commercial property for Rs. 1.5 crore and invested Rs. 50 lakhs in REC bonds and Rs. 20 lakhs in Bajaj Finance FD with a monthly payout at 8.5% interest. Now, you aim to invest the remaining Rs. 80 lakhs to generate a monthly income of around Rs. 50,000.

Evaluating the Bajaj Finance FD and its Risks
Bajaj Finance FD:
Risk Considerations: While Bajaj Finance FD offers attractive returns, it carries concentration risk as it's a single issuer. There's also interest rate risk if rates fall or reinvestment risk if you need to renew at lower rates in the future.
Investment Strategy for Generating Rs. 50,000 Monthly Income
To achieve your income target sustainably, here’s a diversified approach:

1. Debt Funds
Benefits: Debt funds offer diversification across multiple issuers and instruments like government securities, corporate bonds, and money market instruments.
Types: Consider short-term debt funds or debt funds with a dividend payout option to generate regular income.
2. Hybrid Funds
Balanced Approach: Hybrid funds (equity-oriented or conservative hybrid) provide a mix of equity and debt. They aim for capital appreciation with moderate risk.
Regular Dividends: Opt for funds with a history of regular dividends to supplement your income needs.
Investment Allocation Strategy
1. Debt Funds Allocation
Risk Profile: Choose funds with a lower duration or higher credit quality to manage risk effectively.
Income Generation: Expect periodic interest payouts that can contribute to your monthly income goal.
2. Hybrid Funds Allocation
Asset Allocation: Allocate a portion to conservative hybrid funds for stability and potential capital appreciation over the long term.
Dividends: Select funds that distribute dividends periodically to meet your income requirements.
Considerations for Long-term Sustainability
1. Risk Management
Diversification: Spread investments across different fund houses and categories to mitigate specific risks associated with any single investment.
Monitoring: Regularly review fund performances and economic trends to ensure your strategy aligns with changing market conditions.
2. Tax Efficiency
Taxation: Understand the tax implications of your investments, especially dividend income and capital gains, to optimize post-tax returns.
Future Planning and Adjustments
1. Estate Planning
Will and Nomination: Ensure your investments align with your estate planning goals, including nomination updates and inheritance considerations.
2. Review and Adjust
Periodic Reviews: Conduct annual reviews of your portfolio to rebalance and adjust investments based on performance and income requirements.
Financial Advisor Consultation: Consider periodic consultations with a Certified Financial Planner to refine your strategy as your financial goals evolve.
Final Insights
Investing Rs. 80 lakhs from the sale of your commercial property to generate Rs. 50,000 per month requires a balanced approach between debt funds for stability and hybrid funds for growth potential. By diversifying across these investment avenues, you can aim for sustainable income while managing risks effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Investing in a fixed deposit (FD) can be a wise choice, especially if you're looking for a safe and stable return on your investment. Shriram Finance Ltd. offers attractive interest rates on their fixed deposits, which might be why you're considering this option.

Let's go through some important points to consider before making this decision.

Safety and Security
Credit Rating:

Check the credit rating of Shriram Finance Ltd. before investing.
Higher-rated FDs are safer as they have a lower risk of default.
Regulatory Framework:

Shriram Finance Ltd. operates under the regulations of the Reserve Bank of India (RBI).
This adds a layer of security, but it’s still essential to review their financial stability.
Interest Rates and Tenure
Competitive Interest Rates:

Shriram Finance often provides competitive interest rates, higher than many bank FDs.
Higher rates can lead to better returns, but ensure the difference is significant enough to justify choosing them over traditional banks.
Tenure Options:

You can choose from various tenure options, typically ranging from 1 to 5 years.
Align the tenure with your financial goals. For instance, if you need liquidity within 3 years, opt for a shorter tenure.
Liquidity and Premature Withdrawal
Lock-in Period:

Fixed deposits usually have a lock-in period. If you withdraw before maturity, you may incur penalties.
Ensure you won’t need the funds urgently before the FD matures.
Premature Withdrawal:

Understand the terms of premature withdrawal, including penalties and reduced interest rates.
This feature is essential if you might need the funds before the FD's maturity.
Benefits of Shriram Finance Fixed Deposits
Cumulative and Non-Cumulative Options:

Choose between cumulative (interest is compounded and paid at maturity) or non-cumulative (interest paid periodically) options.
Select the option that best suits your financial needs. Non-cumulative FDs can provide regular income, while cumulative FDs are better for long-term growth.
Higher Interest Rates for Senior Citizens:

Shriram Finance typically offers higher interest rates for senior citizens.
If you or your spouse is a senior citizen, this can be a great advantage.
Tax Implications
Tax Deducted at Source (TDS):

Interest earned on FDs is taxable. If the interest exceeds Rs. 40,000 in a financial year, TDS will be deducted.
You can submit Form 15G/H if you're eligible to avoid TDS deduction.
Taxable Income:

Include the interest income from the FD in your annual tax returns.
Consider your tax slab while investing, as the post-tax returns might be lower than expected.
Risk Considerations
Company Risk:

Unlike bank FDs, which are insured up to Rs. 5 lakhs, corporate FDs like those offered by Shriram Finance carry more risk.
Assess whether the slightly higher interest rate compensates for this increased risk.
Market Conditions:

Keep in mind that economic downturns can affect the financial health of non-banking financial companies (NBFCs) like Shriram Finance.
Stay informed about the company’s financial performance.
Diversification Strategy
Avoid Concentration Risk:

Don’t invest all your money in a single FD or with one company.
Diversify your investments across different asset classes and financial institutions to minimize risk.
Consider a Bouquet of FDs:

If you decide to invest with Shriram Finance, consider splitting the amount across multiple FDs with different tenures.
This strategy can help manage liquidity needs and interest rate risks.
Final Insights
Investing in a fixed deposit with Shriram Finance Ltd. can be a good option if you seek higher interest rates and are comfortable with the associated risks. However, always assess your risk tolerance and liquidity needs before committing. Diversify your investments and stay informed about the financial health of the institution.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in